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Roadmap For Commercial Real Estate Syndication

One of the most important requirements for purchasing commercial property is having enough down payment money, called equity, to complete the transaction. A very popular method of raising these funds when you dont have it yourself is by forming a group of people who pool enough capital to let you close the transaction. They get a portion of the income and appreciation for their funds, you get the rest for finding, analyzing, purchasing, and managing the property.

When you decide to take the step to form groups of investors through the process called syndication, you run into a situation where the law may require you take on a specific duty to fully inform your co-investors of all aspects of the property and the investment. Most people getting involved in group investments are usually under-informed or inexperienced with regard to the following group-investment concepts:

The legal aspects of the co-ownership of real estate.

Factors that affect the value of commercial real estate.

The process and responsibilities involved in commercial property management.

The fair compensation to the group manager or syndicator, who later becomes the property manager.

When you take on the role of syndicator, you actually create an agency duty to your co-investors. You have a higher responsibility to disclose all of the aspects that can affect a particular commercial property investment, both good and bad. So when you form a group for investment, its very helpful to have checklist for all of the things you need to do so that you meet your responsibilities to your partners. Part of that check list includes:

1.Researching the available commercial rental property in a particular neighborhood and choosing one to purchase.

2.Preparing a preliminary analysis of the investment. This would include its operating history, status of title, proximity to any environmental or natural hazards, the neighborhood, the local and national economies, and finally, the physical condition of the property.

3.Next, you have to get control of the property in your name with the ability to assign it to a successor entity through a purchase contract or option.

4.Once you gain control, escrow needs to be opened with your name as the purchaser, not that of the entity! Youll assign your purchase rights to the entity before you close.

5.Then you complete an analysis of the income and expenses, and confirm the Sellers disclosures regarding the condition of the property, including its improvements, location, title, and operations.

6.Youll also apply for new debt financing (or assume the existing), depending upon what you indicated in the purchase contract. This obviously wont apply if youre buying your commercial building all cash!

7.At this point in the process, you will want to review your plans for forming and operating your ownership entity (most likely a Limited Liability Company) with experienced accounting and legal advisors. Getting this part correct at the outset will save you major of headaches in the future.

8.Now you get really busy. Youll prepare the investment circular, subscription agreement, Articles of Organization and Operating Agreement for the LLC, pertinent exhibits, and addenda. The syndicator (you) is named as the Manager of the LLC in these documents.

9.You now can use the investment circular to solicit investors to fund your purchase, through the LLC.

10.Once youve chosen your investors (there will be a whole article devoted to this subject), you need to get their signatures on the Subscription Agreement and the Operating Agreement of the LLC. Youll also want to deliver their funds to escrow for the close.

That takes you up to completing the purchase. As you can see, theres quite a bit for a sydicator to do just to get the property purchased. We still have to detail the on-going operation of the property. Ill complete your roadmap in the next article and then we can move on to the individual steps in greater detail.

Article Source: http://www.articlesnatch.com

About the Author:
WANT TO USE THIS ARTICLE IN YOUR E-ZINE OR WEB SITE? You can, as long as you include this complete statement with it: “”The Investment Property Insider” is published by Craig S. Higdon, a veteran commercial mortgage banker. He publishes the e-zine and blog, www.InvestmentPropertyInsider.com, for commercial real estate investors, developers, and industry professionals. Visit the blog and get this free report: “The 7 Biggest Loan Mistakes Real Estate Investors Make And How To Avoid Them.” “‘

Read more: http://www.articlesnatch.com/Article/A-Roadmap-For-Commercial-Real-Estate-Syndication–Part-1/667189#ixzz10UJGY7mP
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Real Property Report – California, February 2015

Real Property Report – California, February 2015 February Sales Up 3.3 Percent From January Median Price Gains 1.6 Percent   February 2015 California single-family home and condominium sales were 23,404, up 3.3 percent from 22,659 in January, the largest February increase since 2012. On a year-over-year basis, sales were down 2.4 percent. Regionally, February sales were up 2.0 percent across the nine Bay Area counties, 4.7 percent in Southern California, and 9.5 percent in Central California. “Home sales picked up in February,” said Madeline Schnapp, Director of Economic Research for PropertyRadar. “The acceleration is likely due to the mild winter weather...

The post Real Property Report – California, February 2015 appeared first on PropertyRadar - previously ForeclosureRadar.

Real Estate Syndication – Becoming a Promoter

Question What’s the best kind of partner for me?

Answer The best kind of partner is someone who has opposite or complementary types of skills. For example, if you are an expert in the real estate market and you don’t have great capital-raising skills, then you should absolutely find some one who has strengths where you have weakness es. If you have great skills in real estate, find someone who can raise capital. If you have great skills in capital, find someone who can find the deals in the real estate market; find someone who is in that market, in the trenches every single day. You also might think about taking people as partners who can handle property management and other types of maintenance functions.

Question In an LLC, does the manager have limited liability?

Answer Theoretically, the manager does have limited liability, but the best way to protect yourself is, first of all, to always act in good faith. That means using the operating agreement to specify the duties of the manager and the members. Always use a “hold harmless” clause and indemnification clauses, which are good for all circumstances, except for fraud, crimes and activities that are against public policy. Additionally, it’s not a bad idea to employ some insurance to protect yourself even further.

Question Where do we get joint venture or syndication agreements?

Answer Syndication agreements fall generally into two broad categories. First are the corporate documents that govern the partnership and the partners’ relationships with each other. If the entity chosen is a limited liability corporation or LLC, then an operating agreement would be drawn up that defines the relationships between the parties and describes the relationship the promoter has with the investors and the relationship the investors have with both the promoter and each other. The second category of documents that are required are the securities documents. The LLC documents can be drawn up by any attorney, provided that he or she has experience in this area. However, the documents that are required for the private placement memorandum are much more complicated. The creation of a syndication and accepting investments from passive investors automatically creates a security interest in the property. This means that the Securities and Exchange Commission has the right to put their hands all over your deal and inspect it at any time. So be very careful to have both of these documents drawn up in tandem. They need to be drawn up by the right kind of attorneys who have proper experience in this area, and who have proper training as well. Participants in the successful real estate syndication seminar will receive sample agreements of both types.

Question Have you always made money on your deals?

Answer No one has always made money on all of their deals. If you’re in the marketplace and you’re doing deals, some times things go wrong. Be up front about it; be candid. Everybody respects that things go wrong. As long as things go right more than they go wrong, people will like you and they’ll follow you. Also, and maybe most importantly, be a good communicator about problems – like you are about successes.

Joel began his career as a CPA with the prestigious firm of Price Waterhouse. During his time with the company’s Entrepreneurial Services Group, Joel immersed himself in the real estate syndication business. After reviewing hundreds of partnership agreements and preparing as many tax returns, he left Price Waterhouse in 1986 to start his own syndication firm, raising several million dollars in three short years. By 1990, Joel had built a property management firm of more than 40 employees with a portfolio exceeding $100 million. Joel continues to syndicate real estate and other assets, as well as counseling other promoters on successful syndication strategies. He is also involved in film financing and invests in early stage companies and other deals. For more information about Joel Block and his upcoming seminar, visit his site at http://syndicatefast.com/

Author: Joel G. Block
Article Source: EzineArticles.com
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Real Property Report – California, January 2015

Normal Seasonal Forces Push California Real Estate Sales Lower January Sales Down 23.4 Percent from December Median Price Falls 2.6 Percent January 2015 California single-family home and condominium sales fell 23.4 percent to 22,850 from 29,821 in December 2014. On a year-over-year basis, sales were down 6.1 percent. Regionally, year-over-year sales were down 8.4 percent across the nine Bay Area counties, 4.1 percent in Southern California, and 10.1 percent in Central California. “Seasonal forces typically depress January sales,” said Madeline Schnapp, Director of Economic Research for PropertyRadar. “Still, January 2015 sales are the lowest January sales since 2008, despite near...

The post Real Property Report – California, January 2015 appeared first on PropertyRadar - previously ForeclosureRadar.

New Developments In Short Sale Transactions

Whether you have done short sales in the past, or you have educated yourself about these transactions, you are probably fairly familiar with the basic function of the real estate deal. Essentially, the owner of the home gives a third party the right to the deed of the home and to negotiate with the bank for a discounted price on the home in exchange for avoiding a foreclosure. The owner of the home does not make any money on the deal, but is able to walk away with salvageable credit and no debt over their head in most cases.

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Foreclosures and Short Sales

In the past, real estate investors would do short sale transactions, and then sell the homes on the open market to make staggering profits. Some of my colleagues routinely made 20 to 50 thousand dollars on short sales in fairly short order once they obtained the deed to the property because people were so eager to buy homes. However, since the real estate market took a dive, short sales have become much more common. At the same time, selling short sale properties has gotten more difficult because there are so many homes on the market. As a result, real estate investors have had to find new and innovative ways to flip short sales quickly.

There are a lot of ways to move short sale properties quickly, but before you get started with that, you need to understand some of the pitfalls that can arise thanks to more stringent lending requirements. If you do not factor in these new developments in lending practice and short sale transactions, you may end up with a property on your hands that you cannot get rid of, your short sale deal could simply fall through all together.

One of the biggest issues with short sales is lenders requirement that the sellers name be on the deed of the property. In a short sale, you are the seller, but if you are trying to arrange a quick flip, you may not have been planning to (or be able to) get conventional funding for the purchase of the property. Ideally, you would have your buyer bring in their funding, then purchase the home and you would get the difference. However, many lenders will not give your buyer funding unless you, the seller, are on the deed. This means that you also have to get funding for the short sale.

Sounds difficult? It certainly did complicate things for a while. However, there is a simple answer to this problem that will enable you to get the funding that you need (and your name briefly on the deed) so that you can finish your short sale flip. Well discuss this solution in the next lesson.

Peter Vekselman has been successfully investing in real estate since 1996. He has completed over 1200 real estate deals, owned a construction company, been a private lender, and owned a property management company. Peter currently works with clients all over the US helping them achieve riches in real estate investing. For more information please visit www.CoachingByPeter.com

Article Source: http://www.articlesnatch.com

About the Author:
Peter Vekselman has been successfully investing in real estate since 1996.
He has completed over 1200 real estate deals, owned a construction company,
been a private lender, and owned a property management company. Peter
currently works with clients all over the US helping them achieve riches in
real estate investing. For more information please visit
www.CoachingByPeter.com

Read more: http://www.articlesnatch.com/Article/New-Developments-In-Short-Sale-Transactions–transactional-Funding–Part-1-/970386#ixzz1NNQtXeeN
Under Creative Commons License: Attribution No Derivatives

Real Property Report – California, December 2014

December Sales Up 7 Percent Month-over-Month Sales for All of 2014 Down 11.4 Percent Y-o-Y Median Prices Nearly Unchanged Since May 2014 December California single-family home and condominium sales increased 7.0 percent to 27,770 units, up from 25,964 in November but down 11.4 from 31,340 in December 2013. Total sales for the entire year (January through December) fell 11.7 percent from 2013 and were the lowest since 2007. “As we predicted early in 2014, sales volume stayed near 7-year lows throughout 2014 because prices rose too far too fast in 2012 and 2013,” said Madeline Schnapp, Director of Economic Research...

The post Real Property Report – California, December 2014 appeared first on PropertyRadar - previously ForeclosureRadar.

Real Property Report – California, November 2014

Normal Seasonal Forces Slow California Real Estate Sales November Sales Tumble 17.6 Percent Month-over-Month Median Prices Flat As is typical during the late fall and winter season, real estate sales declined in November. California single-family home and condominium sales fell 17.6 percent to 27,649 units from 33,561 in October. Year-over-year, sales were down 8.4 percent from 30,184 sales in November 2013. On a regional basis, for the month, sales declined 31.7 percent in the Bay Area, 21.3 percent in Southern California, and 24.8 percent in the Central Valley. “The California real estate market has entered its annual hibernation period characterized...

The post Real Property Report – California, November 2014 appeared first on PropertyRadar - previously ForeclosureRadar.

Real Property Report – California, October 2014

October Sales Up 4.4 Percent Month-over-Month Median Prices Flat October 2014 California single-family home and condominium sales increased 4.4 percent to 33,376 units from 31,985 in September. Year-over-year, sales were down 5.3 percent from 35,256 sales in October 2013. On a regional basis, for the month, sales were up 2.0 percent in the Bay Area, 4.3 percent in Southern California, and down 1.6 percent in the Central Valley. The median price of a California home in October was 385,000 dollars, unchanged from September. Median prices have been more or less unchanged since June 2014. On a year-ago basis, median home...

The post Real Property Report – California, October 2014 appeared first on PropertyRadar - previously ForeclosureRadar.

Real Property Report – California, September 2014

California Real Estate Market Stuck in Low Gear September Sales Limited by High Prices and  Relatively Tough Lending Standards  September 2014 California single-family home and condominium sales fell 5.6 percent to 32,017 units from 33,931 in August. In the past 12 months, sales are down 4.4 percent from 33,484 sales in September 2013. September 2014 sales were the lowest September sales since 2007. On a regional basis, over the past 12 months sales are down 3.7 percent in the Bay Area, 4.9 percent in Southern California, and 8.3 percent in the Central Valley. “The California real estate market is stuck...

The post Real Property Report – California, September 2014 appeared first on PropertyRadar - previously ForeclosureRadar.

Real Property Report – California, August 2014

Bloom Off the California Real Estate Rose August 2014 Sales Down 13.5 Percent from August 2013 Median Prices Fall in Half of California’s Largest 26 Counties   In August 2014, 34,269 California single-family homes and condominiums were sold, down 4.2 percent from July’s total of 35,787 and a decline of 13.5 percent from 39,614 sales in August 2013. August 2014 sales were the lowest August sales since 2010. On a regional basis, over the past 12 months sales are down 15.7 percent in the Bay Area, 16.7 percent in Southern California, and 18.8 percent in the Central Valley. “The bloom is...

The post Real Property Report – California, August 2014 appeared first on PropertyRadar - previously ForeclosureRadar.

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